By Ekaterina Kober
Asia’s appetite for digital banking services is growing stronger as regulators look to increase license allocations for new players to disrupt the market.
The Malaysian central bank, for example, plans to issue up to five digital banking licenses by the first quarter of 2022.
In Indonesia, while there are no plans yet to go down the license route, new “guiding principles” are set to be released by the country’s financial watchdog in the middle of 2021.
This trend, in part attributed to consumers’ willingness to experiment with new cashless services, is likely to grow even more so following the pandemic and associated fear of touching cash. Oracle’s Money & Machines: 2021 Global Study found that 74 per cent in the region felt that events of 2020 have changed how they want to handle physical money, and 33 per cent stated that cash-only is now a deal-breaker for doing business.
Financial inclusion for the unbanked
Banks have been looking to a digital-first future for some time, but many have struggled to adapt. Now, with cloud and emerging technologies like artificial intelligence (AI) being increasingly adopted, there are some clear examples of how these technologies have been leveraged successfully to create a superior customer value, offer frictionless experiences that are appealing to a new generation of financial customers.
Even before the outbreak, digital banking providers were already making payments faster, cheaper, more transparent and reliable, and driving other clear end user benefit, such as financial inclusion for the unbanked.
These efforts have reached communities previously untouched by banking services, but the impact does not stop there.
Building human connection digitally
Traditionally, the relationship between customers and banking providers was based on regular in- person contact. Without that human touch, fintech providers must find other ways to understand customers’ digital behaviour and build that trust and relationship.
Many are leveraging AI to gain richer insights into customer behaviour, and curate hyper personalised experiences that make banking easier and more enriching for consumers.
Blocking prying eyes from confidential information
Security is certainly top of mind when it comes to digital banking. IT leaders in banks face unprecedented challenges in that the very technology that is driving this transition, enabling cyber- attackers to become more aggressive. And with digital banking taking accessing funds well outside of the security of the four walls of a bank, it also increases the surface attack area.
So just what can banks do in the face of this conundrum?
Cloud is part of the answer. The third annual Oracle and KPMG Cloud Threat Report 2020 revealed that 75 per cent of IT professionals view the public cloud as more secure than their own data centres.
In addition, digital banking providers can leverage the public cloud in some instances to reduce infrastructure complexity and improve security, while allowing IT teams to focus their talent on higher-value tasks.
Take ManagePay Systems Berhad (MPay), Malaysia’s leading commerce blended fintech provider. As well as its well-known payment services, MPay also has a number of associated operations aimed at providing a complete end-to-end digital ecosystem for Malaysia’s small businesses to bring products to market. Amongst these are BuyMalaysia.com, a comprehensive digital commerce platform facilitating sales of local Micro, Small & Medium Enterprises (MSMEs) from start-up to export. To help it deliver a simple, trusted and secure experience to its customers, it selected Oracle Cloud Infrastructure (OCI) to underpin the applications delivering this and several other brands.
Bringing it all together with Cloud
With consumer expectations rising and the risks of cyber-attacks continuing well beyond the pandemic, cloud services, including AI, with their untapped potential to improve the customer experience and protect sensitive customer data, will be key to the future of digital banking.
Fusing technology with the innovative spirit of fintech players will help the industry become better equipped to meet the needs of consumers today and make things like the unbanked a thing of the past.